Topping or another sideways correction?

It's been now about 2 weeks since I believed the market had reached a potential top and look where we are today. This is a market that's hard to hedge, let alone short and today we are still waiting for a significant move to confirm the next leg. I mentioned yesterday that if 1512 held there was a good chance we could see 1495 tested and I guess the market got somewhat close by bottoming at 1498 before rebounding and making up again more of the losses for the day. However, there is still lower highs the market has to deal with so again if continue to get lower highs, specially one topping around 1510 then we'll have a bearish pattern set and will likely tip the market to the downside. But if the market can overcome these overhead resistance levels then it will clear the way for more upside. But to add perspective, I posted the long term chart so you can see what the market looks like at the "macro" level. The RSI has been making lower highs while the market has gone up, there is a daily cross on the MACD (which has been whipsawed only 2 times out of 12 crosses, so an 84% chance of the cross pointing to a top). And lastly, there is a bearish trend confirmation of many of the global markets, most notably Europe and HSI. So just like the US ended up catching up to the world with the current rally, it should end up catching up to the bearish side sooner rather than later.

The 20% I've sold have started a good correction and should the US correction kick in, I will buy back that portion at a great price. I've started trading that 20% using a certain set of rules (mostly based on "opinion") and if I buy at the Fib retracement level (which would equate to an 8-15% correction) and get another 20% run. I will have doubled my capital on that 20% since the time I started applying this system in the fall of 2011. If I tweak that system, I might get an even better return so we'll see.

Main S&P 500 Trends

Short Term Trend = Neutral

Medium Term Trend = Bullish

Long Term Trend = Bullish

Long Term Portfolio

• 60% Long in Red Chips traded in HSI (Mainland China stocks traded in Hong Kong) since September 2012. Only position trading 30-40% of portfolio for cost improvement. - Sold 10% on 12/27/12, Sold 10% 01/22/2013

Short Term Margin Trading Strategy 

• Bought 800 VXX @23.70 and 1700 SPXU@ 31.68
• Bought 1000 VXX @ $25.78 as of 01/16/2013, Bought 1000 VXX @23.68 on 01/22/2013 - Sold @22.70 to position trade on 01/25/2013. Took loss $2.00
• Bought 1000 VXX @ $25.92 as of 01/15/2013 - Closed @25.96 on 01/15/2013 . = +0.04
• Bought 30 AAPL @ $509.50 as of 12/14/2012 on margin - Closed @514.50 on 12/17/2012. = +5.00
• Bought 1000 XIV @18.62 as of 12/13/2012 on margin - Closed @18.70 on 12/14/2012. = +0.08
• Bought 1000 XIV @18.80 as of 12/05/2012 on margin - Closed @18.88 on 12/07/2012. = +0.08
• Bought 1000 XIV @18.41 as of 12/04/2012 on margin - Closed @18.63 on 12/05/2012. = +0.22
• Bought 500 VXX @29.23 on 12/03/2012 - Closed @30.12 on 12/03/2012. = +0.89
• Bought 500 VXX @30.77 on 11/23/2012 - Closed @29..68 on 11/27/2012. = -1.09
• Bought 500 VXX @31.54 on 11/20/2012 - Stopped out @31.11 on 11/21/2012. = -0.43
• Closed position 500 @ 18.26 on 11/20/2012. Sold 500 @ 17.79, raised stop to break even on the other 500 as of 11/19/2012. Bought 1000 XIV @15.98 as of 11/15/2012 on margin - position trade cost improvement 4 cents, so net cost $15.94 as of 11/16/2012 - Profit = $2.05 
• Bought 1000 XIV @16.88 as of 11/14/2012 on margin - Stopped out @ 16.66 on 11/14/2012. = -0.22
• Bought 1000 XIV @15.67 as of 11/08/2012 on margin - sold 1000 XIV @ 16.25 on 11/12/2012 = +0.58
• Margin positions in Gold initiated 11/06/2012.

Net Profit since 11/08/2012 on open and closed short term positions = $2,625*

* Margin position is usually $15-20k

* Margin position in gold is $4k